1. PAKISTAN ENERGY FORUM-2015 Oil, Gas, Power MEGA-PROJECTS MEGA-INVESTMENT LEVERAGING to SUCCESS 19-Feb-2015 1

2. Leveraging Case Study from Khyber Pakhtunkhwa Objectives 1.Fast Track Hydel Projects (shrink time to COD) 2.Cheap Indigenous Power 3.Economic Change 4.Fast Track P1 Oil & Gas Projects and Equipment 5.Release ADP for Social projects 6.Leverage Liquid Gold (30,000 MW) & Black Gold 2

3. Definition of Leverage Mechanical advantage gained by being in a position to use a lever Ability to influence a system in a way that multiplies the outcome of the efforts without the corresponding increase in the consumption of resources. A small amount of cost to yield high returns. 3

4. Lever 4

5. Leveraging Case Study from Khyber Pakhtunkhwa Leveraging Operational Hydro Power Plants 1.Malakand 81 MW 2.Pehur 18 MW 3.Total 99 MW 4.Both 100% owned by the Government of Khyber Pakhtunkhwa 5.Zero Debt Leveraging Under Construction Hydro Power Plants 1.Daral Khwar 36.6 MW 100% GoKP Equity 2.Ranolia 17 MW 80/20 Debt/Equity Ratio ADB/ADP 3.Machi 2.6 MW 80/20 Debt/Equity Ratio ADB/ADP 4.Total 56.6 MW 5

6. Leveraging Case Study from Khyber Pakhtunkhwa 1.IPO 25% of Malakand & Pehur (IPPs) 2.Refinancing of Malakand & Pehur (IPPs) 3.IPO 25% of All IPPs 4.Plough back NEPRA allowed ROE back into Hydro Projects 5.Net Hydel Funds from Tarbela 6.Oil, Gas & LPG Royalty, Windfall Levy & Production Bonus 6

7. Leveraging Case Study from Khyber Pakhtunkhwa Resultant Public Sector: 1.COD IPP 270 MW HPP by 2018 2.COD IPP 800 MW GTCC by 2018 3.COD IPP 5,000 MW HPP by 2022 4.COD IPP 10,000 MW HPP by 2025 5.Raising/Investment $ 25 Billion (100 time KP annual Budget) 6.Double Oil & Gas Production by 2025 7

8. Next to be Leveraged (not selling) 1.Tarbela, Mangla…… 2.Gencos 3.Govt Share in companies like KAPCO 4.Transmission System 5.DISCOs 6.Oil/Gas Fields of OGDCL, PPL, Mari & GHPL 7.Surface Facilities of Oil/Gas 8

9. Leveraging Process Action 1.Concept cleared by the Energy Apex Committee of Government of Khyber Pakhtunkhwa – Feb-2014 2.Interacted with international and national Financial Advisers, Fund Arrangers, Banks, Lawyers etc. 3.RFP Floated to raise $ 800 Million (Sept-2014) for Fund Arranger 4.Two Strong Consortia Bid (others wanted but late) – One winner 5.Next RFP End-March US$ 1 Billion 6.Valuation 7.Hiring Advisers: Legal, Owners Engineer, Insurance, Risk Management, Audit 9

10. Leveraging Investment Process Action 1.Pakhtunkhwa Energy Development Organization PEDO has independent BOD 2.Establishing a KP Power Holding Company Ltd. 3.Establishing a SPV for each Hydro Power plant or a cluster 4.Infrastructure Bonds 5.Listing KSE, AIM, LSE 6.Establishing a Company in Jersey Island 7.Market based Salaries 10

11. Thousand of Micro/Small Hydro Financial Leveraging 1.A few Pilot Projects 2.Generation License, Tariff, by Govt of KP 3.Upfront Tariff 4.PPA by SPV 100% owned by Govt KP 5.PEDO facilitating Planning, Financing and EPC – Cook Book/Conferences 6.Community Participation 7.Prepaid Meters 11

12. Oil & Gas Sector Financial Leveraging Revenue from Security Government of Khyber Pakhtunkhwa has created a ‘Fulcrum/pivot’ namely, KP Oil & Gas Company Ltd. to assist Exploration & Production companies. With small funds and large assistance from Government of Khyber Pakhtunkhwa millions of barrels oil and millions of cubic feet of gas to be explored. Government of Khyber Pakhtunkhwa eyeing on billions of Royalty, Windfall Levy, Production Bonus, economic activities, tax etc. 12

13. Oil & Gas Sector OGDCL, PPL, MPCL, GHPL Instead of 100% Equity into P1 (Surface facilities). They may sell Share/borrow money to construct the Surface Facilities. Saved money to be invested in Exploration. A number of international investing companies are willing to invest at Development stage taking risk as well. Leverage GIDC 13

14. Recommendation 1.Capacity Building at provincial and federal levels and academia 2.Re-visit Policies, Rules & Acts 3.Finance Division, Planning Commission, NEPRA, PPIB, NTDCL, PESCO, M/O Water & Power, DG PC, MPNR to facilitate 4.Fast Track PPA, IA, Tariff Determination (LRMC) 5.Crack Team of Federal and Provinces, PEPCO System, NEPRA, SECP, SBP, FBR, 6.Technical Assistance from ADB, WB, USAID etc. 14

15. KHYBER PAKHTUNKHWA OIL & GAS COMPANY LIMITED (KPOGCL) Thanks Q&A RAZIUDDIN (RAZI) CEO KP Oil & Gas Company Ltd. (KPOGCL) Cell +92 300 500 1038, +92 333 538 0240 Phone: +92 91 5615142-8 Fax: +92 91 5615149 Email: razi.ceo@kpogcl.com.pkrazi.ceo@kpogcl.com.pk Peshawar, PAKISTAN 15